More often than not software companies start off selling and marketing in their home market. This isn’t always the case, but it is true in the vast majority of cases. Whether this home market focus is intended just to build an initial reference customer list of 10-20 customers, or lasts until the company build a dominant position in its home market–this usually isn’t the final endpoint for the company’s products. Eventually most companies set their sights on far away markets which they usually can’t serve in exactly the same way from their home office. So what’s the best way to do this? Let’s take a look at a few possibilities:
Remote sales offices
This is the preferred method of remote sales and marketing for several company profiles including large companies with vast pools of resources, companies whose product MUST be sold directly–and finally those “control freaks” that just don’t play well with others. These approach plays well when the application fits into one or more of these categories:
- Highly technical, complex or otherwise just not easy to use
- Requires significant customization that requires (or is best done by) company employees
- Long and/or difficult sales cycle
- No obvious distribution partners exist
The “Pros” to this approach is obviously the control, focus and local expertise that comes with putting “folks on the ground” in faraway local markets. For some situations this is a no-brainer and absolutely necessary for success. But in most circumstances there needs to be some hard analysis done before embarking on this path. Because the “Cons” to this approach start and really end with COST.
This can be a very expensive endeavor, dramatically increasing your fixed marketing costs and especially your sales costs. Before you make this investment it’s imperative to make sure that 1) it’s necessary and 2) you have the financial resources to pull it off. I’ve seen many early stage companies, in particular, make this investment and burn through their cash before they can grow their revenue in excess of their high fixed costs. The other more minor Con to this approach is that if your brand is new and you’re strictly selling direct, you don’t get to take advantage of the brand and market position of potential partners–potentially slowing market adoption versus what’s optimally possible through other market entry methods.
Local distributors, VARs and other third party resellers
For everyone but the largest companies or companies with those products which for various reasons absolutely MUST be sold direct, leveraging partners is the traditional method of accessing remote markets–at least in the early days. When working with early stage software companies I almost always try to introduce this method, even if it’s part of a hybrid approach. That’s because there’s much to be gained for a new brand by associating itself with a highly credible and well known local partner with an existing customer base. So even if you can you utilize the other methods outlined in this article–if desirable local partners are available it is more often than not the right thing to do to work with them. It’s usually far better to give up a piece of your revenue to the most desirable local partners, than it is to compete with them as they push your competitor’s products.
Remote from HQ
Particularly in these days of the Internet a third major market entry method has emerged–all selling and marketing is done “virtually” from the home office. Often this is the first approach taken by a company, usually out of necessity. The company lacks resources to open remote offices and also lacks initial partner contacts or expertise in how to properly develop an international network of channel partners. But many software company business plans–particulary SaaS companies– these days call for this to be the primary marketing and selling method on a worldwide basis. On the surface this is entirely possible using modern Internet marketing methods along with sales communication tools such as Skype, Webex, Go-to-Meeting and even not-so-modern ones such as email, phone and fax. But whether this is the best market entry or long-term penetration approach depends on a number of factors:
- Ease of use–the easier your software product is too use, the more likely you’ll have success
- Price points–lower price points lend themselves to better selling through lower touch methods
- Lack of obvious partner channels–while there are creative approaches possible (as I spelled out in this article), if there aren’t obvious partners and you don’t have money to open offices, remote/online is the default approach.
- Low need for localization–Marketing and selling everything from HQ works best in homogenous market segments; B2B segments in particular are easier that B2C
- Market stage–the irony here is that this method is often the primary one in newer market segments by default, but it’s easier to market/sell remotely in a more mature market segment where your solution is more well-understood and seen as less risky
What’s the optimal method of accessing remote markets?
So at the end of the day, what works best? Of course there is no perfect answer to this question. Like most sales or marketing strategy questions, there is no best, one-size-fits-all method for all companies in every market situation. It’s important to carefully size up what are the key sales/marketing attributes that are required to sell your particular product, as well as analyze the available resources to get the job done. In fact, I find in many cases that a hybrid model incorporating two or more of the approaches outlined above are necessary due to a variety of limitations and often work best in the complicated real world.
So there are some ideas to get you started in making the important decision on how to approach remote markets. Do you agree? Other suggestions based upon your own experiences? Post a comment below to extend this discussion.